Ofcom’s Equinox 2 decision pivotal to UK fibre future

Ofcom’s Equinox 2 decision pivotal to UK fibre future

Ofcom offices

The next two months are “critical” for the UK’s fibre access network sector according to David Hilliard, CEO of Mentor Europe.

Hilliard’s comments come after Ofcom delayed its decision on Openreach’s proposed fibre-to-the-premises (FTTP) Equinox 2 pricing offer that it hoped to introduce in a few weeks.

The proposal allows providers to get Openreach’s gigabit-capable FTTP broadband products at the beginning of April at prices that are up to 15% cheaper.

But Equinox 2 was delayed after Ofcom said it received “a number of detailed and extensive responses” to the plan.

Strong competition

The crowded altnet environment has led to increasing competition for the major players operating in the market.

“There are now dozens of operators building FTTP networks, some of them overlapping, the costs associated with rolling out and running networks has gone up and money is now more expensive to raise,” Hilliard said.

“Some UK fibre altnets have been struggling to raise fresh funding and the always inevitable market consolidation process has begun.”

In February, Ofcom said that Equinox 2 was “not anti-competitive” and aligns with the watchdog’s goal to increase investment in high-speed networks.

Yet, since receiving the responses, Ofcom has pivoted its stance on the scheme.

CityFibre, itself reportedly in talks with VMO2 over a takeover, welcomed the decision.

“Ofcom appears to be taking the industry’s concerns about Equinox 2 seriously,” Greg Mesch, CityFibre CEO, said in response to the Ofcom decision.

“Taking more time to properly consider the impact of Equinox 2 is the right approach if UK consumers and businesses are to benefit from a healthy competitive market for the long term.”

According to Hilliard, Openreach is now reacting, in part, to the “serious competition” it faces from CityFibre.

“But CityFibre has lasted, has funding, is building out its network, and in a market where having the first fibre to the door is a massive advantage, has put the wind up Openreach.

“If late April comes and Ofcom says it has examined Equinox 2 and the responses to its consultation and still finds no issues with Openreach’s plans in their current form, further legal challenges, and serious questions about whether Ofcom is fit for purpose, will almost certainly be in evidence.”

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